September 22, Weekly Analysis

Three new listing this past week, and they are highlighted on the list.

No Meadows homes went into Pending, and only one home closed escrow: 28021 Grassy Way, a 3/2 of 1,768 s.f. which sold for $330,000 having been on the market 131 days.

There are continuing articles in local newspapers about gains in the “Real Estate Market.”

This is misleading, because there is no “real estate market.” There are MANY real estate markets.

The “real estate market” in Rancho Bernardo, with its many community centers, national reputation and acclaimed Poway Unified School District is vastly different from Hidden Meadows, which came by its name honestly. We have no schools, no neighborhood community centers, we have an address of Escondido that has poor schools even by poor California standards, and a community reputation that is less than sterling. It would help our prices if we had a different address, because the fact that we are not actually in Escondido appears to some people as a distinction, not a difference.

There is a belt across North County from north coastal cities, through Encinitas, Rancho Santa Fe, Crosby Ranch, 4S Ranch, Rancho Bernardo and North Poway that always sells well regardless of the market.

Even within Hidden meadows there are sub-markets that I have mentioned before: Homes in the investor and first-time homebuyer market often get multiple offers and sell quickly. (They may not close quickly because the lenders, particularly lenders of homes in short-sales and foreclosures, are not overly cooperative these days.)

Homes in the Executive market and the Luxury Market in Hidden Meadows have not caught up to the sales rate of the lower priced homes. Homes above $600,000 have always been our “move-up” market – sellers of lower priced homes purchased “up” when their jobs were secure and their business flourished.

More recently, the sales of normally priced homes have been by people underwater, or elderly and moving to retirement homes, or foreclosures and short-sales rather than the usual “move-up” people whose businesses are flourishing. Consequently, until the overall business market improves and confidence returns, the “move-up” market is just marking time.

Bad News

In what can only be said to be bad news for the overall economy, homes entering the foreclosure system rose 18% in California and 12% overall in June over June of last year. This is the second straight month of increasing foreclosures being initiated in California, and indicate an impatience on the part of lenders to tolerate people not paying their mortgages.
(Right here in The Meadows, I know of homes where no house payment has been made for several years but the banks have not yet proceeded against the owners. Every indication is that the banks are stepping up the process.)
According to an Associated Press report, there are more than 3 million households who are behind on their payments (Mortgage Bankers Association), and 13 million US homes that owe more than the current value of their homes.
Overall, it takes 378 days from the time a homeowner gets notification of bankruptcy proceedings untol the home is actually taken over by the bank. Banks historically hold onto the home for some time so as not to flood the market.
At the end of June the banks had 629,000 homes on the market, and not sold. (RealtyTrac)
Many of the homes will go into Short Sale, rather than be taken over by the bank. Nationally, it takes 318 days for a Short Sale home to be sold.

Last year, the lenders seized about one million homes, according to RealtyTrac and the Associated Press, and the prediction is that another 700,000 homes will go into bankruptcy this year.
These are scary numbers, particularly the information that lenders are starting to proceed against those who have not paid their mortgage.
More Short Sales and Foreclosures spell trouble for home prices. We have had solid sales over the past few months in the under $500,000 price range, but few sales above $500,000.
The numbers in the Associated Press report spell trouble for future sale prices, and could depress the housing market further, or at the very least extend the poor housing market time to recovery, and keep the overall economic market limping along.
The answer to one of the questions on the California Broker’s Exam that I took more than 30 years ago was, “Housing markets lead recessions, and lag recoveries.”  That has always been the case, and indicate more years of economic struggle.

April 7 Update

April 7, Weekly Analysis

Three new listings his past week: 10139 Sage Hill Way, a 4/3 of 2,996 s.f. was listed at $399,900; 28042 Glenmeade Way, a 3/3 of 2,159 s.f. was listed at a variable price of $495,000 — $535,000; and a home at 29078 Welk Highland Drive (Rimrock) was listed at $660,000.

Three homes went into Pending this past week: 10634 Meadow Glen Way East, a 3/3 of 3,250 s.f. went into Pending having been listed at $469,000; 10344 High Mountain Drive, a 3/3 of 2,923 s.f. went into Pending, having been listed at $470,000; and a home at 9629 Misty Meadow Lane (Rimrock), a 4/5 of 5,344 s.f.  went into Pending, having been listed at $930,000.

Three homes Closed Escrow this past week: 9808 Dogwood Lane, a 3/2 of 1,888 s.f  Closed Escrow at $330,000; 9926 Sage Hill Way, a 3/3 of 2,660 s.f. Closed Escrow at $410,000 s.f.; and 28707 Rolling Rock Road, a 5/3 of 2,800 s.f Closed Escrow at $435,000.

The market continues to be red hot below $500,000, and there is at least the beginning of movement above $500,000, but it is fairly spotty. Three homes that went into Pending this past week did not quite match our long string of four Pending homes a week, but three is well above average in ANY market.

Within a week, I will list two homes with a combined value over $3,000,000, so I am hoping that the “luxury” market improves over the Summer. My personal Meadows listed properties will reach $4,000,000 by July and that will be just THREE homes, so if anyone knows someone looking in the luxury market….

The banks recognize the market is changing, and they have been sitting on a large inventory of foreclosed homes that we expect to see on the market this year, to take advantage of the increased sales and decreased inventory. What no one knows is how large the pool of available Buyers is, their motivation, and whether the increased foreclosure dump onto the inventory will overwhelm the available Buyer pool. The “shadow inventory” of bank-owned but unlisted properties could impact market prices, unless the banks are sensitive to their impact on market inventory, and therefore prices.

Best Local Housing Analysis

This interesting excerpt written by Rich Toscano  from addresses the current San Diego County housing situation as usually noted in the press, using the Case-Shiller index:

“The Case-Shiller numbers I usually report on are not seasonally adjusted: they make no attempt to compensate for the fact that prices tend to be stronger in spring and summer than in fall and winter.  This is good in that it shows us the actual degree of price changes taking place (or an estimate thereof, anyway), which is obviously interesting.  The problem is that it’s harder to ascertain the underlying trend: if prices are going up in the spring, for instance (as now), is it simply due to the typical underlying seasonal pressures, or would prices still be rising absent those pressures? “

I commend Rick’s analysis of Case-Shiller, which is the best technical index available. He actually understands numbers.

Those of us “in the industry” understand our own market, in my case Hidden Meadows, and any small slice of a market may, at any given time, be running with or against the tide but we are still influenced by the larger market. It is a fact that any individual agent may be on a hot streak, or a cold one and to that agent the “market” he or she sees is very different.

But for general technical knowledge of the San Diego market, you can’t beat Rick Toscano at

June 12 Analysis

June 12 Weekly Analysis

The loss of home equity with a continued slide of home values will further diminish the ability of the rest of the economy to recover, and simultaneously the ability of the rest of the economy to recover diminishes the ability of the home values to stop sliding.

Admittedly, the ability to take second trust deeds both fueled a strong consumer economy and at the same time placed homes underwater as prices started to slide.

Apparently, borrowing against equity was overdone – but there is no economic yellow light to indicate when so much is too much.

The continued home value slide places still more homes underwater – even homes that had reasonable value remaining just a few months ago. Now, there is no room left to take a loan against many houses to keep a small business alive, and more and more vacancies appear in local shopping centers. That translates directly to more homes going on the auction block because as businesses fold, the business owner is unable to repay the trust deed he or she used to secure the loan to open the business.

The amount of surplus one has in their home determines to a huge degree the feeling a family has about their financial worth – and that is reflected in the confidence they have in the economy. Almost everyone sees their home equity diminishing along with their confidence in the economy, and that feeds upon itself.

Obviously, an outside force needs to be instituted and quickly, because housing markets, like all markets, tend to overcorrect. In the Great Depression, FDR tried pump-priming without success, but a World War was sufficient to do the job, at a very high price.

Both exuberance and fear are contagious. Entropy has set into the system, and a shock of considerable magnitude will be necessary. Working around the edges will not do the job.


There is a saying in real estate that the cheapest you can buy a house is the day before a second offer is made on the same house.

That obviously has more credence in a rising market than in a falling market, but it is still possible to miss out on a favorite home by delaying too long. I know that Buyers believe that Sellers are so anxious to sell that they will accept anything, and that there is no competition – but that does not always hold and particularly for exceptionally desirable properties.

Well priced, clean properties in nice locations will always draw a crowd.

On the other hand (I feel like a lawyer), not all Sellers can count on getting a single offer, much less multiple offers.  It is a judgment call, and gambling can add months to the length of a sale and loss of thousands of dollars in a dropping market.

Obviously every situation differs because all situations are different, but the rules of thumb hold. It is much like I have always preached in computers – there are industry standards, and it is possible to deviate from them but you had better have a damn good reason, know the downside and be willing to accept them.

There are rules in every industry – not rules written in stone and handed out on the top of mountains but natural rules developed from many years of experience – much like typesetters learned from years of experience their rules which desktop publishers didn’t ever learned and produced, and still produce what is known as “laser crud.” You probably don’t know that there is a cultural difference in what Europeans and Americans expect to see as a typeface in Headlines and body copy, but typesetters do.

The real estate industry has heuristics, or rules of thumb as well. Buyers and sellers don’t sell or buy often enough to learn the Rules of the Road, and, in truth, neither do inexperienced Realtors.

A Double-Dip in Housing Prices?

The Case-Shiller Report has reached the conclusion that we are in a double-dip housing decline, but there is not much evidence that there was ever a bump to make this a double-dip instead of just a continuation of a bad housing problem.

“”This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” David Blitzer, chairman of the index committee at S&P Indices, said in a statement. “Home prices continue on their downward spiral with no relief in sight.”

There is no longer any reason for continued drops in housing prices, except for an overall economy that cannot provide job security needed for home purchases. That lack of job growth has caused Consumer Confidence to fall as well.

Not only was the housing market oversold, so was the jobs market and now corporations have discovered that they can do just as well as before but without the same number of people. Until the government stops paying for people to wait for their old jobs to come back, the jobs market, like the housing market will suffer from an excess of product. There are simply more people than available jobs.

Those in the currently fully subsidized job market, who are currently being paid to NOT work, will have to offer their knowledge/skills on the entrepreneurial or part-time market, because there is no incentive for corporations to rehire them and there is not likely to be. Regardless of who wins the next election, the next administration will not continue to pay people to wait for their old job to become available to them again.

But people just selling their knowledge and skills in the part-time and entrepreneurial markets do not buy new homes for a long time. The best they can do is to hold on to what they have, and where they fail their homes go into foreclosure and the housing market continues to cycle down.